Jornal do Comercio: Price of property in Pernambuco at absurd heights, making its purchase “the largest devaluation of consumer’s money in history”

An interesting article at Jornal do Comercio caught our eyes as the writer (Andre Luis dos Santos Patriota) seems to be one of a few in the mainstream media that has the courage to criticize and discuss the real estate bubble in Brazil, which is something that’s been kind of a tabboo up to now… a “don’t ask don’t tell” sort of thing to hide the looming problems as the media sells ad space to property developers and banks in Brazil.

His words below (highlights ours)…

“We need to open our eyes about this so-called “boom” in real estate. Enjoying the good times because of … the high volume of mortgages granted by banks, real estate companies are irresponsibly increasing the price of its projects well above market trends.

Speculation and high prices are justified based on the prospects offered by the World Cup and the Olympics. If such events were any fuel for the economy and investments, Greece (2000 Olympics) and Japan (2002 World Cup) would not be experiencing economic difficulties. Let me give an example, in 2008, a relative bought a property at launch (in the plant) for R$ 147,000. Today a “similar” project (same area, same size) goes for R$ 350,000… an increase of 140%.

From 2008 to 2012 the salaries of engineers and workers increased very little… and the expensive land prices can not be justified by inflation. So I come here to remind you that buying property during periods of high real estate appreciation is not recommended. The builders say that the apartments became smaller in size so they can cost less. But what you see today is quite the opposite: the buildings are smaller and more expensive. This is the largest devaluation of the consumer’s money in history.“

Property prices in Recife (Pernambuco) are one of the highest in the country according to the Economic Research Institute Foundation (Fipe). The square meter, in Recife, costs R$ 5,015, second only to Brasilia (R$ 7,965.00), Rio de Janeiro (R$ 7,687.00) and São Paulo (R $ 6,215.00).